As of Jan. 1, 2023, the Inflation Reduction Act (IRA) has taken full effect, creating significant energy efficiency rebates and tax credits for Arizona families looking to make needed upgrades to their homes.

Those planning to install or replace their water heater systems will be happy to learn that doing so may cost less than anticipated, thanks to programs like the High-Efficiency Electric Homes and Rebates Act (HEEHRA) and the IRA.

What Is the HEEHRA Program in Arizona?

The HEEHRA program was specially designed to provide $4.5 billion in funding to the states to create point-of-sale rebates for home electrification projects specifically for low- and moderate-income households. A “point-of-sale rebate” means the rebate is transferred to the customer when the purchase is made, resulting in a discounted price for the installation or upgrade.

HEEHRA Rebate Amounts for Water Heaters

Under the HEEHRA program, qualifying households may claim up to $1,750 in rebates on heat pump water heaters. A total of $14,000 in HEEHRA rebates may be claimed for appliances and energy efficiency upgrades each year.

Who Qualifies for Energy Efficiency Rebates?

Only specific households may qualify for energy efficiency rebates under HEEHRA. These rebates are reserved for households that earn less than 150% of the area’s median income (AMI) as set forth by the Department of Urban Housing and Development (HUD).

These are the stipulations that must be met to qualify for program rebates:

  • Households making less than 80% of AMI may use rebates to cover 100% of their water heater installation or replacement.
  • Households making between 80% and 150% of AMI may use rebates to cover 50% of their water heater installation or replacement.

Note: If your household earns more than 150% AMI, you will not qualify for rebates under the HEEHRA program. However, thanks to the IRA, there are still ways to save on the cost of your water heater installation or replacement.

Energy Efficiency Tax Credits for 2023

Those who don’t qualify for HEEHRA rebates may still be eligible to claim energy efficiency tax credits under the IRA. Contrary to a point-of-purchase rebate, tax credits do not reduce the purchase price of your water heater installation or replacement. Instead, the savings are claimed when you file your taxes, allowing you to increase your refund or reduce the total taxes you owe.

As of 2023, Arizona families can take advantage of the Energy Efficient Home Improvement Credit, allowing them to claim 30% of the total cost of eligible projects up to $2,000 annually for heat pump water heater installations.

Can You Combine Energy Efficiency Tax Credits & Rebates?

While HEEHRA rebates and IRA tax credits are separate programs, technically, customers may combine them to maximize their savings. However, it’s important to note that very few households will be eligible to take advantage of both programs, so it’s critical to be realistic when anticipating the total cost of your project.

Generally, HEEHRA rebates are reserved for low- and moderate-income households, while IRA tax incentives are available to all families.

Take Advantage of Available Tax Credits & Rebates for Your Water Heater Installation

If you’re planning to install a new water heater in your home but aren’t sure how to navigate Arizona’s rebate and tax credit programs, we can help. At Donley A/C & Plumbing, our team is well-versed in understanding local tax incentives and rebate eligibility, allowing us to help our customers maximize their savings on their water heater installations and replacements.

We’ll demystify the process, giving you clear instructions on how to reap the rewards that HEEHRA and IRA can provide while ensuring a smooth, stress-free water heater installation process.

Upgrade your water heater while taking advantage of available tax credits and rebates. Call 602-787-3956 to request water heater installation or replacement today.